Unlocking the value in your organization requires a solid business case for every improvement effort. Implementing 5S, building dry erase boards, even having full daily management systems without a well-defined cause or problem make implementation twice as hard and half as successful. There are two critical reasons you should have a business case for your improvement: It aligns everyone on the value of the effort and ensures that you understand the problem you are trying to solve.
Align Everyone on the Value of the Effort
Successful improvement efforts are targeted directly at a business problem that needs to be solved. The problem could be as simple as not being at the ideal, but is defined as a gap or problem. The first step in problem solving or A3 thinking is to clearly define the problem. Strategic A3s are called the business case.
Similar to a court of law, the business case makes the argument for why the improvement is needed. An insurance claims processing center may consist of a series of desks lined up in rows with paperwork spilling out of baskets. It is noisy, cluttered, and obviously unorganized. An improvement effort to clean up the area — even a full blown 5S event (sort, shine, simplify, standardize, and sustain) — would be justified.
The most effective implementation for this effort would start with a rich understanding of the business value of the effort in concrete measurable terms. Employee morale measured by a survey, lost claims per day, employee turnover, or processing delays caused by missing information would all make the case for the need for the effort. It is critical to then wrap the business need into a value. Maybe a hazard index, returned claims cost, lead-time to the customer, or training cost for new employees is reduced. All of these can be measured and communicated as a sign of the 5s improvement’s success.
These measures help ensure that everyone understands the problem with the business because of the current condition. Without such measures, a group is left to rely on audit scores to sustain and measure the improvement. The challenge here is having motivation to sustain. It is much easier to connect with the benefits of reduced claim return costs and feel good than it is to achieve satisfactory audit scores just for the sake of them.
Ensure You Understand the Problem You are Trying to Solve
Most improvement is easily justified as valuable. It is hard to argue that 5S, process management, TPM, or changeover reduction are not needed. In almost all cases they are, but if you are implementing the change based on opinion of the problem or value or simply to meet a copy initiative, you may not see the benefits. Asking what problem you are trying to solve and building a case for the improvement helps understand that problem.
Suppose a large saw is seen as a bottleneck in producing logs needed for a lumber company. The owner sees the saw as old and uncared for and initiates a Total Productive Maintenance program to improve the saw’s reliability. Few will argue that it is a worthwhile effort, but if a case has to be made for the TPM effort, the question of why the saw is a constraint has to be answered with data. How often is the saw in need of repair? How often is that the cause of the delay in production? What actually causes the saw to be over capacity? How much improvement in reliability will it take to create the capacity needed? These questions lead to analysis, which leads to understanding.
Help your organization convince a jury of their peers that their improvement efforts will drive business value.
Learn more in Patrick’s book, “Facilitating Effective Change,” available online through Amazon and Barnes & Noble. He is also the founder of UTV Advisors, a business consulting firm based in Pittsburgh, PA.
Patrick Putorti
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